Legal Question in Business Law in California

Discrimination of Right to Invest in Intial Public Stock Offers

Question: How can On Line Stock Investment Firms have the right to accept or deny ones desire to invest in Intial Public Stock Offers (IPO's) using the follwing criteria:

Net Worth and Investment Experience.

I believe that this is a form of discrimation that favors rich investors. This kind of policy discriminates average folks such as I from making good, logical investments.

For example, I am a relatively new investor with limited experience. I have researched a company now up for IPO offering. I have installed the companys software product and desire to make an investment of $ 1000.00 I am not in any way affilated with the company. Yet I am denied from making this investmrent after submitting a customer profile which asks questions of net worth and investment experience. I am then denied from making the investment. (Obviously because I am not a big time, big bucks investor)

How can large stock trading firms (I will not name the well know company) get away with this kind of financial discrimination? How can a average person challenge such discrimination?

Thanks in advance for your thoughts,


Asked on 12/03/99, 7:24 pm

1 Answer from Attorneys
Ken Koury Kenneth P. Koury, Esq.

Re: Discrimination of Right to Invest in Intial Public Stock Offers

It is not the doing of the investment firm. there are federal securities laws that restrict certain types of high risk investments to people Congress has determined can bear the extreme risk. If you dont like it you need to contact your congressman. the investment firm is just following the law.

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Answered on 12/06/99, 4:04 pm


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